EOT Position Update – February 17, 2010

| February 17, 2010

February 17, 2010

Market Snapshot

The fear gripping the market the last few weeks is slowly fading away.  Investors seem to have put Europe’s debt issues to bed, at least for awhile.

The Greek government has 30 days to outline the steps for controlling their runaway budget deficits.  If they don’t get it right, we’ll see more panic in the market.

The markets have bounced back, but we’re not seeing buyers step in very quickly. They’ve come back faster after previous dips in the market.

You see, the market’s gone up the last few days on lower than average volume.  This tells me the big institutional players are still sitting on the sidelines.  I‘d like to see a few up days on better than average volume.  That would confirm this rally is more than a dead cat bounce.

The economic data here in the US has generally come in as expected.  At least there hasn’t been any shocking news to swing the market.

Several key data points are showing improvement.  Take initial jobless claims, auto sales, and housing starts for example.  They show the economic recovery is picking up speed.

At this point, there seems to be a lot of hesitation from investors.  Neither the bears nor the bulls seem to have much conviction about where the markets are heading from here.

Something will come along to spur the market soon.  Until then, hold tight.

Now for the updates…

Position Updates

Just a quick note:  Remember, we won’t update every open position every week.  I try to focus on the positions that have some significant news or price movement.

  INTC July 2010 $20 CALLS 
Intel is our latest trade.  We sent it out last week.  Check your email or the website for the details.  We played calls on Intel in May of last year to the tune of a +300% winner.  A recent pullback has once again provided us with an opportunity.  I think we’ll profit nicely as Intel recovers from the selloff.  Resistance is at $21.50 and $25. Support is at $18.50 and $18.

  AEM May 2010 $45 PUTS
AEM has… well it’s moved against us.  This trade’s designed to profit from the short term volatility in the US Dollar caused by Euro Zone debt fears.  Unfortunately for this trade, the situation has been contained, at least for now.  But I don’t think we’ve heard the last of this situation.  Aggressive traders may want to hold out.  The next resistance is at $65.  Support is at $45 and $42.

  SWKS May 2010 $15 CALLS
SWKS is building bullish momentum.  It was able to close above the 50-day moving average.  That’s a good sign the recent rally will continue heading higher.  Hold tight, we still have plenty of time on this option.  Resistance is at $16.50 and $18.  Support is at $12.25 and $11.50.

  LVS March 2010 $19 CALLS
LVS is also gaining momentum to the upside.  They’ll report earnings today after the markets close.  They’re expected to earn $0.02 for the quarter.  A good number and upbeat comments from management could spark the fire we need.  Hold tight for now. Resistance is at $21 and $25.  Support is at $15 and $13.

  CSCO April 2010 $24 CALLS 
CSCO has recovered to around $24.  But it’s basically flat-lined after a nice rebound. This is typically the kind of consolidation pattern that we’ll see before an explosive move one way or the other.  Aggressive traders should hold tight.  Resistance is at $26 and $29. The next support is at $20.

  NVDA March 2010 $15 CALLS (UVACC)
NVDA broke out of a consolidation pattern the last few days.  The stock and our options are picking up momentum.  Our options are now well into the money. Aggressive traders should hold tight as NVDA makes a run at the previous highs.  The next resistance is at $20.  Support is at $13 and $12.

  SBUX April 2010 $22 CALLS (SSUDV)
SBUX broke out of its consolidation pattern this week too.  Our options are solidly in the money with a few months left to go.  Aggressive traders should hold tight.  We still have plenty of time.  The next resistance is at $26.  Support is at $18.50 and $17.

***Editors Note***

Option Symbology changed on February 12, 2010.  That means a new method for identifying options is now in place.

What does this mean for you?  The old five character option ticker is a thing of the past.  It’s being replaced by a new option ticker format.

Here’s what it breaks down to.

The new option ticker will be expressed as:  Root + Expiration + Strike + Type.

Root = the ticker symbol of the underlying stock.
Expiration = the expiration date of the option.
Strike = the strike price of the option.
Type = Call or Put.

The good news is we already give you all of the information for the new ticker in the trade alert.  The bad news is the new ticker is going to be longer.  And to top it off, individual brokerage firms may generate their own tickers for use only on their platform.  So make sure to check with your broker.

Category: EOT Update

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